Virgin Galactic Holdings, Inc. (SPCE) completed a $355 million repurchase of its 2.50% convertible senior notes due 2027, using proceeds from a $46 million registered direct offering of common stock and pre‑funded warrants and a $203 million private placement of new 9.80% first‑lien notes. The transaction reduces the company’s outstanding debt by roughly $152 million and pushes the maturity of the remaining notes to the second half of 2028, aligning the debt profile with the expected growth of its commercial spaceflight operations.
The new first‑lien notes carry a 9.80% coupon and are secured by a first‑priority lien on virtually all of Virgin Galactic’s assets and any guarantors, providing a strong collateral base. The equity offering and the new debt together provide the liquidity needed to retire the convertible notes and fund the ongoing build of the Delta‑class spacecraft, which is expected to increase flight frequency and revenue potential once commercial service begins in late 2026.
Virgin Galactic’s cash burn has remained high, with negative free cash flow of $460.3 million in the last twelve months. The financing move is therefore a critical step to extend the company’s runway while it continues to invest heavily in the Delta program. The company’s management emphasized that the debt restructuring improves leverage and maturity structure, but also highlighted that the equity issuance will dilute existing shareholders, a factor that has weighed on investor sentiment.
CEO Michael Colglazier said, “We remain full steam ahead, bringing our new SpaceShip into service. We continue to make excellent progress across the many elements of the program, and the number of outstanding items on our production checklist continues to decline with each passing week as we knock out the work.” He added that the company’s commercial operations are on track to launch in 2026, and that the new financing will support the build and testing of the Delta‑class fleet.
Investors reacted negatively to the announcement, citing the dilution from the equity offering and the higher interest rate on the new debt as key concerns. The market’s reaction underscores the ongoing need for capital raises and the company’s current unprofitability, even as the financing improves its long‑term debt profile.
The transaction signals Virgin Galactic’s continued focus on achieving commercial viability while managing cash burn. The extended maturity and reduced debt load provide a more favorable balance sheet, but the dilution and higher cost of capital highlight the challenges the company faces in transitioning from development to revenue‑generating operations. Investors will likely monitor the company’s progress on the Delta program and its ability to convert the capital infusion into sustainable cash flow in the coming quarters.
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